The United Auto Workers union said Monday that it reached a tentative contract with General Motors, the last of the Detroit Three automakers to agree to a deal.
Under the agreement reached early Monday at the union’s headquarters in Detroit, workers at all three companies will return to the job pending votes on whether to ratify the contracts, which will take place over the next two weeks.
The GM deal follows tentative agreements reached with Ford on Wednesday and Jeep-maker Stellantis on Saturday. All three deals have to be voted on by the 146,000 union members who work at the Detroit companies.
The union’s targeted strikes against the companies began on Sept. 15.
The main provisions of the deals are largely the same at all three automakers, but there are small differences. In each case, workers would see 25% general pay raises, including an 11% increase upon ratification. Including cost-of-living pay, the raises would total more than 30% over the life of contracts, which would run through April 2028.
The GM deal was reached after CEO Mary Barra, facing an estimated $200 million per week in losses from the strike, went to the UAW’s Detroit headquarters Sunday night intent on getting a new contract.
She and others were able to close to close a deal with UAW President Shawn Fain and others that is likely to end a contentious six-week work stoppage.
The tentative deal, which came on Fain’s 55th birthday, capped a furious few days of agreements that still need to be ratified by 146,000 UAW members. Ford agreed to a new contract last week and was followed by Stellantis on Saturday, which raised the pressure on GM to settle for essentially the same terms.
Members could still vote down the contracts, but it’s likely they would bring labor peace to the domestic auto industry, at least until they’d expire on April 30, 2028.
Most industry analysts say contracts with the Detroit Three are victories for the UAW, which had sought big gains to make up for concessions it made to help the companies get through the Great Recession of late-2007 to 2009. Fain initially wanted 40% raises and even asked for a 32-hour work week for 40 hours of pay, but he didn’t get all of his demands.
During the talks, which began last summer, the companies said they were reluctant to agree to the union’s terms, fearing they would force them to raise vehicle prices higher than competitors with nonunion factories in the U.S., including Toyota and Tesla.
For GM, which was losing millions of dollars each week the strike lasted, the impetus was clear: Reach a deal so it could open an SUV factory in Spring Hill, Tennessee, as soon as possible. About 18,000 GM workers were on strike.
Mike Huerta, president of UAW Local 602, which was on strike in Lansing, Michigan, was hesitant to celebrate the deal before seeing more information, saying that “the devil’s in the details.”
“Our bargainers did their job. They’re going to present us with something and then we get to tell them it was good enough or it wasn’t,” said Huerta. “We were ready to continue if we needed to,” Huerta said. “And if we do turn it down, we’ll be ready to go back again.”
Shammira Marshall, a forklift driver at GM’s parts warehouse in Van Buren Township, west of Detroit, said the holidays will be a bit nicer this year thanks to the tentative deal.
“Christmas, Thanksgiving, the New Year — that’ll help,” she said of her expected raise.
This marked Marshall’s second strike against GM, having walked picket lines in 2019. As word came down of a deal, she and other UAW members worked to disassemble a tent that strikers had used.
“This time it wasn’t bad, because I knew what to expect,” she said.
The GM deal came after nearly 4,000 union workers walked out of GM’s largest North American plant, in Spring Hill, Tennessee, by surprise on Saturday night.
President Joe Biden was asked about the deal Monday, as he boarded Air Force One back to the White House. He gave a thumbs-up and said: “I think it’s great.”
Spring Hill is a key facility that would have brought down other GM factories had its workers stayed on strike. It produces the engines for vehicles assembled at nine plants as far afield as Mexico, plus the electric Cadillac Lyriq, GMC Acadia and two Cadillac crossover SUVs.
Erik Gordon, a business and law professor at the University of Michigan, said the union got much of what it wanted in the deals, which will raise the companies’ costs at a critical and historic time as the industry switches from internal combustion engines to electric vehicles.
“The companies are trying to figure out how to transition to EVs without losing too many billions of dollars, and now face a huge bump in labor costs for the products that will finance the EV transition,” he said.
A study this month by Moody’s Investors Service found that annual labor costs could rise by $1.1 billion for Stellantis, $1.2 billion for GM and $1.4 billion for Ford in the final year of the contract. The study assumed a 20% increase in hourly labor costs. Ford said the deals will add $850 to $900 in labor costs per vehicle.
Wells Fargo Analyst Colin Langan estimated that the contracts would drive up the companies’ hourly total labor costs by about 30%, to $76.08 at Ford, $78.15 at GM and $75.63 at Stellantis. Analysts have said that foreign automakers with U.S. factories generally have hourly labor costs of $45 to $60, which includes what they spend on worker benefits.
The union, however, said the companies are making billions of dollars in profits per year and can afford to pay workers to make up for previous concessions. It contends labor expenses are only 4% to 5% of a vehicle’s costs.
The higher costs, plus a more combative stance against the companies from Fain, could make GM, Ford and Stellantis rethink opening any new factories in the U.S., said Gordon.
Presidents of the Ford union locals voted unanimously in Detroit on Sunday to endorse that tentative contract after Fain explained its details, the union tweeted.
At Stellantis, workers would get cost-of-living pay that would bring raises to a compounded 33%, with top assembly plant workers making more than $42 per hour. Top-scale workers there now make around $31 per hour.
Starting wages for new Stellantis hires will rise 67% including cost-of-living adjustments to over $30 per hour. Temporary workers will get raises of more than 165%.
Like the Ford agreement, it will take just three years for new workers to get to the top of the assembly pay scale, the union said.
The UAW began targeted strikes against all three automakers on Sept. 15 after its contracts with the companies expired. At the peak, about 46,000 UAW workers were on strike — about one-third of the union’s 146,000 members at all three companies.
Associated Press writers Frank Bajak in Boston, Michelle Chapman in New York, Joey Cappelletti in Lansing, Michigan, and Mike Householder in Van Buren Township, Michigan, contributed.
